WASHINGTON, Sept. 8 (Xinhua) — The U.S. economy added fewer jobs than expected in August, underscoring signs of a cooling labor market and bolstering expectations of a Federal Reserve rate cut later this month.
The economy added just 22,000 jobs last month, far below analysts’ forecasts, while the unemployment rate rose to 4.3 percent, according to data released by the Bureau of Labor Statistics on Friday.
The latest jobs report marked a sharp slowdown from July’s gain of 79,000 jobs. June’s figures were also revised down by 27,000 to a net loss of 13,000 jobs, the first monthly decline since 2020.
Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, told Xinhua: “I have long forecast an economic slowdown in this fall or winter. This seems to be the first sign.”
“Consumer debt problems, slow hiring by small firms, and Trump‘s tariffs are all taking a toll. This has been offset by the AI spending boom, but maybe that has crested,” said Hufbauer.
When asked about the possibility of the Fed’s rate cut, Hufbauer said: “I still think 25 (basis points) at the September meeting, but the weak jobs number opens the argument for a 50 (basis point) cut. The problem is that inflation is still hovering near 3 percent,” he said.
The Fed has kept its benchmark interest rate unchanged at 4.25 percent to 4.5 percent since December 2024.
The Chicago Mercantile Exchange Group’s FedWatch Tool, which gauges market expectations for federal funds rate changes, indicated an 88.2 percent probability of a 25-basis-point rate cut at September’s meeting as of Monday noon.
Federal Reserve Chair Jerome Powell addressed economic challenges in a speech on Aug. 22 in Jackson Hole, Wyoming.
“In the near term, risks to inflation are tilted to the upside, and risks to employment to the downside — a challenging situation,” Powell said.
Signs of a weakening economy raise questions about the potential political impact on U.S. President Donald Trump, who campaigned on promises of a vibrant economy.
An August Gallup poll showed 40 percent of Americans approve of Trump‘s overall job performance, while 37 percent approve of his handling of the economy.
An NBC News Decision Desk poll released Sunday found 43 percent of Americans approve of Trump’s overall job performance, while 61 percent disapprove of his handling of inflation and the cost of living.
Clay Ramsay, a senior researcher at the Center for International and Security Studies at the University of Maryland, told Xinhua: “If we imagine this type of economy continuing into next summer, it will definitely hurt congressional Republicans. But this doesn’t mean it will impact Trump’s personal support much, or impact Trump’s ability to keep Republican officials obedient.”
“My working guess is that among the half of voters who supported Trump in 2024, about a quarter will be influenced by their personal experiences with the economy such that they’ll stay home, or vote Democratic in the 2026 (midterm) elections,” Ramsay said.
Brookings Institution Senior Fellow Darrell West told Xinhua: “There are so many changes taking place that business executives are holding back on their investments and hiring. This bodes poorly for Trump and congressional Republicans.”
“Voters are worried about their futures and have doubts about how the president is executing his plans. It could be a tough next year for Republicans,” said West.
